The effect of the oil & gas sector’s Final Investment Decision (FID) on the development of local content in the provision of services to the sector in Uganda.

Abstract

This research paper sought to highlight the importance of the recently proclaimed Final Investment Decision (FID) in Uganda’s oil and gas sector and the potentially (positive?) ripple effect it would have on the provision of ring- fenced goods and services in the sector. FID normally signifies a point of financial close whereby the International Oil Companies (IOCs) demonstrate a significant monetary commitment to the development and production of the natural resource by investing vast amounts of money and technology in extracting and monetizing-in this case, the hydrocarbons.

I sought to elucidate how this decision and the subsequent investment of the substantial capital and operational expenditure will go a long way in developing indigenous Ugandans in the provision of be-spoke services in the industry, giving them the necessary skill set to compete on a global scale, but also showing the economic benefits of this exposure and the trickle-down effect it would have on society. The livelihoods of Ugandans will be immensely improved by this decision.

The Paper also examined whether the decision to carve out certain services for the local populace will not turn out to be a double-edged sword, considering that there would be no benchmark upon which the quality and depth of service would be based, seeing as the IOCs upon whom these services are being ‘thrust’ will not have much of a choice but to accept them.

Finally I explored the long-term effect that this provision of services by local service providers would have on the improvement of Ugandans as a competitive global workforce, with the exportation of skilled labour and the domino effect it would have on the standard of living and improvement in per capita income of the common man.